This is a rush transcript from "Your World With Neil Cavuto," November 6, 2009. This copy may not be in its final form and may be updated.
CONNELL MCSHANE, GUEST HOST: Well, unemployment is soaring, and the administration is scrambling.
To a guy now who is hiring. Google CEO Eric Schmidt just talking to Neil, and only to Neil.
NEIL CAVUTO, HOST: You have very good relations with the Obama administration, and that of course the subject of a "Fortune" cover in the latest issue.
ERIC SCHMIDT, CEO, GOOGLE: Yes.
CAVUTO: On one level, I guess that`s very flattering, but on the other, you must have been banging your head against the wall, because there`s no way you come out winning with that.
SCHMIDT: Well, you don`t want to be too close to any particularly administration, and they don`t want to be close particularly to you.
CAVUTO: Well, take it from us here at Fox, that`s not a worry. But go ahead.
SCHMIDT: And, so, from our perspective, the Obama administration has done a number of things that are important from a Google perspective, most important focusing on a national broadband plan, which is something that all of us can agree will bring great prosperity to America and give us an opportunity to really innovate.
CAVUTO: But they are not above looking into your business or antitrust issues, because, with your success, a lot of their other friends say, well, you know, they are getting too big for their britches.
SCHMIDT: We expect that. And the regulators have a job to do. And we expect it, not just in the United States, but also especially in Europe.
From our perspective, if you look in terms of my message to the administration, it is really about innovation, that Google is an example of a company that can help invent new industries in America, that can really bring jobs back, can really bring the kind of America that all of us want to be part of, the advanced manufacturing, biotech, and the other things that America is a world leader in.
Investments there and encouraging the private sector, which is where jobs are created, that works.
CAVUTO: The president likes you personally. You are on his — variety of advisory boards, I guess. How do you like him?
SCHMIDT: On a personal basis, I like him a lot. He`s very, very smart. He is a tough thinker.
And one of the things about President Obama that people didn`t see on the campaign was how decisive he was. And given the set of problems that he has been handed, I think he has been quite decisive.
CAVUTO: Yes, but I know you backed him and all that, but do you think — you are a pretty good manager — that he has spread himself too far, too wide?
SCHMIDT: I don`t, but I think that he has — I don`t believe he has spread himself too far, but I do believe that our system gets in the way of being a proper CEO. After all, the Constitution calls for the Congress to exist and to do its thing.
And if you look at what is happening with legislation, which is true, by the way, in the previous administration as well, the Congress is riddled, if you will, with special interests, their own motivations, representation that could — this is how our system works.
CAVUTO: Yes. Yes.
SCHMIDT: It`s very difficult to manage through that, whether you are President Bush or President Obama. And my heart goes out to both of them on that.
CAVUTO: But as a pretty important global executive, does it bother you that the tone not only at the White House, but in Washington, it has been kind of open season on executives and their wealth? And whether they`re in the financial industry or the health insurance industry, they have a big old bullseye on them.
SCHMIDT: It is easy to demonize people, especially after the harm that was done to the average person in our society by the powerful and the elite, who essentially precipitated both the credit supply and then the collapse. I understand the anger.
I would tell you that there is an opportunity now to fix this. We have technology. We have measurement systems. We have open systems and transparency.
CAVUTO: But do you think it has gone a little far?
SCHMIDT: Do I think that personally? Absolutely it has gone too far.
But I understand it. And I think the solution is not to spend all the time talking about what happened, but rather say, how do we avoid these crises in the future? How do we avoid creating all that — all the mess? How do we put it to bed forever?
SCHMIDT: And we can do that, by the way, using transparency and how computers talk to each other and making — remember that, in the Web, people have a lot of ability to monitor what our government is doing, and that is a good thing.
CAVUTO: Well, maybe you can make software to fix it or software to just come up with these numbers, because part of the way they`re going to for health care and some other things is they think that you can get savings.
But you`re a good number cruncher as well. Can you leave it at taxing the top three-tenths-of-one-percent, raising their taxes another five percent, in other words, in a couple of years, bring the top rate another 10 percentage points higher?
Now, for guys like you, billionaires, I guess, you could afford it, but do you worry about the direction?
SCHMIDT: I worry that the math doesn`t work, and I worry that it doesn`t work because when I add up the growth in health care costs and the likely trajectory and the lack of effective cost controls, that we will continue to have an underfunded program.
CAVUTO: OK. So just taxing the rich alone won`t do it?
SCHMIDT: Well, the question is who is going to pay for health care going from roughly 15 percent of our economy to roughly 21 percent, as most of the forecasts say?
And, remember, that increase in percentage drives out investment in non-health care businesses, manufacturing, things that create other kinds of jobs. So, today, as a young person, the only industry you should go into is health care, because that is the one that is going to be hiring everyone under these set of options.
CAVUTO: No. I think they just join Google, but that`s another thing.
CAVUTO: Do you look at Google and what is happening right now? Everyone does mention the Microsoft comparison. They mention the IBM comparison, other behemoths in the day that got a little cocky, got a little super sure of themselves, and, then, boom, upstarts came along.
And the reason why I mention it is, they say, people, kids today, they are on Twitter, they are on Facebook, and all, and that is their universe. And for many of them, you are not.
SCHMIDT: Well, everything we have seen indicates that Twitter and Facebook users are using Google even more, so we are very happy with that. But general question of leadership and sort of are you the next Microsoft is really a function of attitude. The companies that you mentioned made mistakes years ago that hopefully we are not making, and hopefully the mistakes we are making now won`t put us in those kinds of predicaments, that our sensitivity toward end users, our focus on consumers, our focuses on bringing costs down, not up, our focusing on letting people get out and take their information with them, is a much better model for the information age than these older models.
CAVUTO: Do you ever want content? I`m thinking of that, because in light of the Comcast-NBC discussions, whether you would be interested in doing something like that.
I raise it because the talk that you guys were interested in buying The New York Times.
SCHMIDT: We had a series of questions about what to do to talk about content. And we ultimately decided to not get in the content business.
CAVUTO: But you seriously looked at The New York Times?
SCHMIDT: We looked at The New York Times, but also other institutions.
CAVUTO: What other institutions?
SCHMIDT: Rather than naming them, let`s just say we did a survey. And our conclusion was, we are not very good at it. It`s not a...
CAVUTO: It wasn`t necessarily you didn`t like the newspaper?
SCHMIDT: No, no, no. To the contrary, we like information, but we think it is better for those to be managed by the professionals that are managing them, we think, well now.
CAVUTO: When you spoke in San Francisco not too long ago, you didn`t rule out acquisitions.
SCHMIDT: Well, I`m careful not to ever rule out anything, because that is always a mistake as a CEO.
SCHMIDT: But I will tell you it`s highly unlikely we would get in the content business.
It is fundamentally better for us to be the supplier of platforms and modernization and revenue and advertising and subscription services to all of these players. We desperately need the newspapers, the magazines, the media companies to be successful, because we need their content. But the thing we can offer is better modernization, better targeting, and a better user experience viewing content created by very, very sophisticated people.
CAVUTO: All right. So, if you don`t mind my pushing this puppy, Eric, then, with the Comcast-NBC talks, if they were spinning off those operations or doing any of that, would you be interested in any of that?
SCHMIDT: As I said, extraordinarily unlikely we would be interested in that.
CAVUTO: When it comes to other content providers on the Internet, what about that?
SCHMIDT: Again, similar answer. If it`s content, where you have people producing content that viewers are looking at, we are better off powering it, not writing it and owning it.
CAVUTO: We touched on a little bit salaries, CEO compensation, and the rest. So much of your fortune has been built just in the stock of your company that has soared over the years.
But what do we do about this? The argument is that by capping CEO pay, whether it`s in the financial industry or other industries, bright, shrewd CEO and their top lieutenants will find other ways to get rich.
What`s the solution?
SCHMIDT: Well, I`m sure that people will find other ways to get rich. That has been the story of American since its founding.
The most important thing to do is to get the alignment of interests correct. The problem with what happened a year ago was that you had people, if you will, privatizing the game, but they socialized the losses to the government. And that is not OK. They fundamentally took the money ahead of everybody else.
At least in the high-tech industry, where you have ownership of equity, the individuals involved succeed or fail based on the value of the stock over a very long time. And that is a much better way of aligning the — solving essentially the agency problem, where the CEO may or may not be working in the interests of the shareholders.
CAVUTO: But paying someone a lot of money...
SCHMIDT: But why not pay them in stock instead? Why not give them an incentive, just like...
CAVUTO: Just stock, not options or any of this?
SCHMIDT: Yes, stock, or options with appropriate restrictions, so it looks like stock ownership.
CAVUTO: Because what the administration is talking is something over many, many years, not just something that vests over a year or two...
SCHMIDT: Well, again, I don`t know the details and couldn`t criticize it one way or the other.
I will tell you that, when you have got a stake in the corporation for the long term, you are going to behave as a steward of it, and you`re going to act in the best interests of the long-term shareholders, which is the ultimate goal of American capitalism.
CAVUTO: Did the president ever ask you to serve in his Cabinet?
SCHMIDT: We had some conversations, and I concluded that I was much more excited about staying and — and being committed to Google. And I am committed to Google.
CAVUTO: So, he did ask?
SCHMIDT: That`s all I will say.
SCHMIDT: That`s all I will say.
SCHMIDT: Thank you.
CAVUTO: All right. Was it a nice lunch?
SCHMIDT: We had a very nice time.
MCSHANE: Neil keeping at him — Neil`s exclusive interview with the Google CEO, Eric Schmidt.
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